The world has changed rapidly this year thanks to the outbreak of COVID-19. One of the more unfortunate trends can be seen by looking at the stock market.
While some big-name companies like airlines and cruise ships are showing a substantial loss, the stock market has almost entirely recovered from one of the fastest and steepest declines in history.
It has to do with the fact that publicly-traded companies have access to capital. Smaller businesses don’t. More importantly, many of today’s largest companies are able to thrive in a pandemic because they offer services that allow business to continue. That’s why investors sent shares of Zoom Video Communications (ZM) soaring, and why companies like Microsoft (MSFT) and Netflix (NFLX) are at all-time highs.
But there are a number of smaller companies that are also interesting as stealth plays for an ongoing pandemic. And part of beating the market is doing the research necessary to find stocks with market-beating potential.
Surprising COVID Stock #1: Alpha Pro Tech (APT)
When COVID-19 started getting serious, investors started looking for companies that made high-quality masks capable of high filtration. While many gravitated towards 3M (MMM), that’s only a small proportion of their business.
For small-cap play Alpha Pro Tech (APT), however, masks are their entire business. The company has seen its revenue surge by tens of millions of dollars, at time when its revenues had only just hit a few million. That led to an explosion in shares higher, and the long-term trend is likely for higher prices still.
While its share price got a little heated during the worst of the market selloff, shares have since cooled down a bit, down about half from their all-time intraday high.
As the virus seems likely to continue for some time, the company’s recent surge of orders only looks like the first wave of substantially higher revenues over time.
Surprising COVID Stock #2: Avid Bioservices (CDMO)
After years of underperforming the broad market, pharmaceutical and biotech companies have been major performers. Typically, any company working around the clock on a COVID vaccine has gotten the top returns, as well as the headlines.
But in any rush, there’s always an equipment supplier. It’s not as exciting a story behind it, but it can be much more consistently profitable.
That’s the case with Avid Bioservices (CDMO). It’s a contract development and manufacturing company, focusing on products like antibodies and recombinant proteins.
That’s an unusual product to sell, and it’s a highly regulated space that keeps new competitors at bay, even right now.
But even better? Shares are inexpensive but have a lot of upside over the next few years. This is one surprising COVID play that hasn’t gotten a lot of attention yet.
Surprising COVID Stock #3: Stamps.com (STMP)
With so many analysts focused on e-commerce giants like Amazon (AMZN), there are a number of companies operating in the space that have performed even better.
One such trade? Stamps.com (STMP). Amazon shares may be up nearly 50 percent in the past year… but Stamps.com is up 386 percent, and still has room to go.
The reason? As people engage in more e-commerce, they use more postage. E-commerce trends had been slowing in recent years, before nearly doubling thanks to the coronavirus.
Additionally, companies find it valuable to use Stamps.com to avoid sending employees to post offices as well. Stamps.com partners with the United States Post Office to bring all of their services into every home and business. Business looks to be good for some time, especially the longer that COVID-19 concerns linger.